Edexcel IGCSE Economics - Paper 1: Microeconomics and Business Economics

Things that are produced in order to be sold

Having an end or limit

Without limits

Land, Labour, Capital, Enterprise

There is only a limited or finite quantity of resources

The basic requirements for human survival

Water, food, warmth, shelter, clothing

People’s desires for goods and services

Holidays abroad, better houses, bigger cars, improved healthcare, better education

Allocation of a nation’s scarce resources between competing uses that represent infinite wants

Amount of resources available when supply is limited

What to produce, How to produce, For whom to produce

Cost of the next best alternative that is given up when someone makes a choice

Training its workforce, buying new machinery

Spending by a government

Purchased by firms and used to produce other goods

Factories machinery, tools, equipment

Purchased by households

Food, confectionery, cars, tablets, furniture

Line that shows the different combinations of two goods an economy can produce if all resources are used up

An opportunity cost is incurred

Increase in the level of output by a nation

It shifts outwards

New technology, Improved efficiency, Education and training, New resources

Resource depletion, Adverse weather, Increased outward migration, Wars

Something that affects a situation in a way that you cannot be sure what will happen

To increase something such as profit, satisfaction or income as much as possible

Money that a business receives over a period of time, especially from selling goods or services

Consumers aim to maximise benefit, Businesses aim to maximise profit

They have difficulty in calculating the benefits, They develop buying habits, They are influenced by the behaviours of others

Companies, organisations or businesses

Performance may be influenced by other people in the organisation, Alternative business objectives, Operate as charities, Social enterprises

Activities involved with managing and organising the work of a company or organisation

Line drawn on a graph that shows how much of a good will be bought at different prices

Table of the quantity demanded of a good at different price levels - can be used to calculate the expected quantity demanded

Amount of a good people are willing to buy at given prices over a given period of time supported by the ability to pay

When price goes up, the quantity demanded falls and when price goes down the quantity demanded rises

The amount of a good that consumers are willing to and able to buy at a given price

Movement to the left or right of the entire demand curve when there is a change in any factor affecting demand except the price

Income that is available to someone over a period of time to spend - including state benefits and excluding direct taxes

Goods for which demand will fall if income rises or rise if income falls

Goods for which demand will increase if income increases or will fall if income falls

Fashion and tastes, Price of substitutes, Price of complements, Income, Advertising, Demographic changes

To the right

Rise

Fall

Rise

Goods bought as an alternative to another but perform the same function

Goods purchased together because they are consumed together

Fall

Rise

Basic systems and structures that a country needs to make economic activity possible

Urban areas

To the right

The amount of a good that producers are willing to and able to offer for sale at different prices

Line drawn on a graph which shows how much of a good sellers are willing to supply at given prices

For or in each year

When the price goes up, the quantity supplied also goes up and when the price goes down the quantity supplied goes down

Movement to the left or the right of the entire supply curve when there is any change in the conditions of supply except the price

It is impossible for sellers to increase supply even when prices rise

A vertical line

Supply at venues where sports matches or concerts are held

Taxes levied on spending

VAT

The rate at which goods are produced, and the amount produced in relation to the work, time and money needed to produce them

Production costs, Natural Factors, Subsidies, Indirect Taxes, New Technology

To the left

Indirect taxes represent a cost to the firm

Amount of goods, services, energy or natural materials used in a particular period of time

Money that is paid by a government or organisation to make prices lower, reduce the cost of producing goods or providing a service, usually to encourage production of a certain good

To raise revenue for government expenditure and discourage the consumption of harmful products

An increase in its supply

To the right

To the left

Price at which supply and demand are equal

Price at which the amount supplied in a market matches exactly the amount demanded

Amount of money generated from the sale of goods calculated by multiplying price by quantity

TR = P * Q

The amount supplied in the market is completely bought up by consumers, so there are no buyers left without goods and there are no sellers left with unsold stock

Rise

Fall

Where demand is greater than supply and there are shortages in the market

Where supply is greater than demand and there are unsold goods in the market

Change the price, Adjust supply

The responsiveness of demand to a change in price

Change in price results in a proportionately smaller change in the quantity demanded

Change in price results in a greater change in the quantity demanded

Price Elasticity of Demand = (% Change in Quantity Demanded / % Change in Price)

Demand where PED = ∞ - an increase in price will result in zero demand

Demand where PED = 0 - a change in price will result in no change in the quantity demanded

Where PED = -1 - the responsiveness of demand is proportionately equal to the change in price

PED is less than 1

PED is greater than 1

Availability of Substitutes, Proportion of Income, Luxury or Necessity, Addictiveness, Time

SPLAT

Elastic demand

Inelastic demand

Price elastic

In the long term

Consumers can search for alternatives and are more prepared to switch